November 28, 2017

EC published the Commission Delegated Regulation (EU) 2017/2194 on markets in financial instruments with regard to package orders. This regulation supplements the Markets in Financial Instruments Regulation (MiFIR or EU Regulation No 600/2014) and amends European Market Infrastructure Regulation (EMIR or EU Regulation No 648/2012). Regulation (EU) 2017/2194 shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union and it shall apply from January 03, 2018.

Regulation (EU) 2017/2194 specifies the conditions that must be satisfied to ensure that there shall be a liquid market for a package order as a whole (Article 1). It also specifies asset-class-specific criteria for package orders consisting exclusively of interest rate derivatives (Article 2), equity derivatives (Article 3), credit derivatives (Article 4), and commodity derivatives (Article 5). For reasons of consistency and to ensure the smooth functioning of the financial markets, it is necessary that Regulation (EU) 2017/2194 and the provisions laid down in MiFIR, or Regulation (EU) No 600/2014, apply from the same date. Regulation (EU) 2017/2194 is based on the draft regulatory technical standards submitted by ESMA to the EC.

Package orders are common in all asset classes and may include many different components within the same asset class or across different asset classes. Therefore, package orders may comprise an unlimited number of combinations of components. Accordingly, it is appropriate to adopt a holistic approach in establishing qualitative criteria to identify the package orders that should be considered as standardized and frequently traded and, therefore, as a whole, having a liquid market. To take into account the characteristics of the different types of package orders, those qualitative criteria should include general criteria applicable across all asset classes as well as specific criteria applicable to the different asset classes comprising a package order.

 

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Effective Date: December 18, 2017

Keywords: Europe, EU, Regulation 600/2014, MiFIR, EMIR, Package Orders, Asset Classes, EC

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